Stemming the economic slide due to disorder caused by the pandemic
PRIME Minister Narendra Modi has appealed to people to follow COVID-19 guidelines strictly as the virus is still around and slight negligence can cause an upsurge. With a number of festivals scheduled to be celebrated during the months from October to December by followers of various faiths, people do need to maintain all caution, else they would have to pay a heavy price. Although the graph of the infection has not been shooting up as in the past months, people should not take the precautions lightly. Europe and the US have witnessed a sudden spurt of the coronavirus cases after witnessing a fall for some time. This was a worrisome situation and Indians should avoid driving themselves into such a situation. In recent months the virus infection has risen in some states where restrictions were relaxed in view of festivals. People have to be on guard till an effective cure is found.
COVID-19 had a devastating effect on the country’s economy. A recent survey has revealed that 78 per cent of Micro, Small and Medium Enterprises (MSMEs) and startups in India have reduced their workforce in the last 8 months since the COVID-19 pandemic broke out. The survey conducted by LocalCircles has found out that only 22 per cent startups and MSMEs have the same or increased workforce as compared to the pre-COVID-19 levels. The survey was conducted to understand the startup and MSME pulse on their workforce adjustments due to the coronavirus pandemic. It elicited responses from over 7,000 startups, MSMEs and entrepreneurs spread over 104 top business districts of the country. The survey has revealed that India’s startups and MSMEs ecosystem went through a torrid time due to the onslaught of the coronavirus pandemic and subsequent lockdown. The MSMEs and startups had their revenues and operations impacted during the period from March to August, with many of them resorting temporarily or permanently to shutting down their businesses as part of cost cutting measures. As per the survey report, around 60 lakh Indians had lost white collar jobs during the period.
As many as 25 per cent of the respondents shut down their businesses altogether and let go of their entire workforce, while 15 per cent reduced the workforce by 50 per cent or more. According to the report, 19 per cent companies had reduced their workforce between 25 and 50 per cent, and another 19 per cent by up to 25 per cent. Interestingly 6 per cent of the respondents said their workforce has increased, while another 16 per cent said they have the same workforce as pre-COVID-19 time. One very significant thing to note about the economic situation is that though the central government announced packages and took other steps to help small businesses through the Atmanirbhar Bharat scheme, the positive impact on the state of businesses was quite limited. Another surprising find of the survey has been that many of the businesses have reduced employing women. While some have reduced employing women by 100 per cent, others have cut down women workforce by 25 to 50 per cent.
Though the restrictions imposed in view of the lockdown have been withdrawn to a large extent, life has not returned to normalcy, which is impacting all spheres of life including economy. There are lakhs of others in the workforce, besides the 60 lakh white collar workers, who have lost their jobs. The packages announced by the Centre had limited impact on job creation and retention. There is a need for the Centre and the states to come out with further stimuli to give impetus to the economy, which would lead to its revival. Leaving the MSMEs, startups and other businesses on their own could lead to the shutdown of more businesses, leading to an even bigger number of the employees losing sources of employment. The government has to bear in mind that people cannot be made to live a restricted life indefinitely and measures need to be taken to ensure that they have work and food to survive. Absence of jobs and food insecurity could lead to mass flouting of safety guidelines wiping out the gains made over months. The economy of India will suffer further setbacks as a result, without any light in sight at the end of the tunnel.